MARKET WATCHCrude prices rebound above $61/bbl

Aug. 5, 2005
Crude prices rebounded above $61/bbl, and natural gas hit a 9-month high in the New York futures market following a bullish government report Aug. 4 on US gas storage.

Sam Fletcher
Senior Writer

HOUSTON, Aug. 5 -- Crude prices rebounded above $61/bbl, and natural gas hit a 9-month high in the New York futures market following a bullish government report Aug. 4 on US gas storage.

The Energy Information Administration reported the injection of 37 bcf of natural gas into US underground storage during the week ended July 29. That was below the consensus of Wall Street analysts (OGJ Online, Aug. 4, 2005).

The market remains concerned about the ability to meet growing energy demand in the fourth quarter of this year and into 2006, especially with several recent refinery problems in the US. "Although crude oil prices have averaged nearly $50/bbl over the past year, global demand, and the US economy in particular, have remained quite resilient," said Robert S. Morris, Banc of America Securities, New York.

Meanwhile, Total SA said Aug. 5 that production from its onshore Obagi oil and natural gas field in Nigeria has been shut in since Aug. 1 because of civil unrest. The field produces 35,000 b/d of oil equivalent and 6 million cu m/day of natural gas. Total officials said they are in talks with local communities to restore production.

Energy prices
Natural gas for September delivery escalated to $8.69/MMbtu during trading Aug. 4 before falling back to $8.47/MMbtu, the highest closing price since November for a front-month contract and up by 12¢ for the day on the New York Mercantile Exchange. Hot summer weather is creating more demand for natural gas to fuel electric generators. "The latest National Weather Service outlook for next week calls for above-normal temperatures for the Northeast, Mid-Atlantic, and much of the Midwest," said analysts at Enerfax Daily.

The September contract for benchmark US light, sweet crudes gained 52¢ to $61.38/bbl on NYMEX, and the October position advanced by 44¢ to $62.31/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., also increased by 52¢, to $61.39/bbl. Gasoline for September delivery increased by 3.14¢ to $1.80/gal, and heating oil for the same month climbed by 1.89¢ to $1.71/gal.

In London, the September contract for North Sea Brent crude rose by 47¢ to $60.12/bbl on the International Petroleum Exchange. Gas oil for August delivery gained $5.75 to $530.75/tonne.

However, the average price for the Organization of Petroleum Exporting Countries' basket of 11 benchmark crudes declined by 36¢ to $55.07/bbl on Aug. 4.

Contact Sam Fletcher at [email protected]